>> so, why are we doing it? it is extraordinary that rather than just come out with a plan that actually begins to get the u.s. financial house in order, we are fighting about the negotiating tactics to do it. now, for the first time investors are actually questioning the credit and the power of the united states government. that is the confidence factor. that is why this period is different than past tested peri periods. when we see the credit and the strength of the u.s. economy questioned, that kind of drop in confidence has the potential to create the next financial collapse. of course, so does unchecked runaway spending. so, it seems clear, neither is a good option. it's hope washington realizes this. quick check on the markets and it was a mixed day. the dow jones up 18 points. nasdaq down 8. s&p 500 down 1.37 points. the real stock of the day was dell. it is higher today on reports that it is in talks over a possible buyout by private equity firms.

take a look. the stock rallied almost 13%. that will do it for us. thank you for being with us. hope you'll follow me on twitter and google plus. stay with cnbc, because "fast money" begins right now. live from the nasdaq market site in new york city's times square. i'm melissa lee. sour apples. shares of the iphone maker slide. is apple turning into forbidden fruit? the mystery event. what facebook could be unveiling in less than 24 hours. we're in countdown mode with one of its biggest investors. and the great rotation into stocks heating up. we get the likely impact. first, our top story. apple shares dipping below $500. it comes following reporters of weaker iphone demand and component order cuts, pete. >> right. and i think when you're looking at apple, there has been the story. everybody wants to put a tab on what exactly is pushing apple to the down side. seems like a broken chart right now. from a valuation perspective, was it overly priced, probably

not. they've got all this cash on the balance sheets, as well. they have all the innovative factors out there. they do have some margin issues they have to be addressed. and they have to be a little bit more innovative, probably, most likely. but the iphone command issue with the components is pressing on the stock once again. this morning, i woke up, it was trading underneath 500s the. we closed above today. i think there are concerns out there. i don't think right now is the time necessarily you have to dip into apple. i continue to pound the table, i think we get below $500 and closer to -- >> in a meaningful way, below $500? >> no, i don't think it's going to completely break down to some of the levels that i've heard, but i think at $465 area seems to be a level that a lot of the guys that i know that follow the charts much closer than i do see the level being. >> i've owned apple a long time, owned 500 puts against it, which means it will close at $500, whatever expiration. in today's move, i don't know what to make of it, but to me,

the $460 february puts seem awfully pumped up. we sold some of them to try to take advantage of the volatility. so, and in fact, i'm saying -- >> get long? >> i would get long, you know, $4 $460, less than nine bucks. >> when you sell apple, what do you buy? those are the high fliers that have been doing well. >> do you? >> i bought google. google closed around $7.23. the mark for google is $7.2290. we'll see what the week holds. this could be below 700s the. >> do you get that sense that there is a rotation out of apple and that they're going to put that money somewhere else and not necessarily into computing or smartphone space? >> it depends. if you are sector specific, you have to go some place. maybe you are a hedge fund, you want to wind it out and go to a different sector. but it is technology.

people want to put money to work. if you are pulling out of apple, you put it into another tech company. >> people at home, b.k., are saying, it's cheap, it's got cash, pays a dividend. all of the bull arguments but we've seen this story before with other technology stocks that have a lot of cash on the balance sheet that have a low p.e. they pay a dividend and they don't move anywhere, haven't moved for ten years. >> the thing about apple, they are a great company. but the company is changing. they're not going to have those high margins that you saw over the last several years. so, now they have to sell a lot more of the little tiny iphones or the little mini ipads. >> when do the margins peak? what phone? >> i believe it's the 3g, the one that i have. >> amazing. >> and i didn't order the iphone 5 yet. you can say b.k. is the problem with apple. >> you are the problem. when it comes to the shrinking margins, we knew that the margins were shrinking, they are on a decline. we've seen that charts before.

>> right. >> so, is that what we get hung up on? the margins? >> i think there is that. there is the idea of the actual percentage margin number coming in. however, i sort of think about overall gross -- any margin, dollars, and if you have the dollars expanding, to me, that's okay, too. that works. i know that this -- i think the valuation versus the gross margin multiple is ridiculous anyway. to see the multiples coming in, now, let's give it a new lower valuation, that doesn't make sense to me. to your point about, we've seen the chop stocks and they are trading at no different than they were ten years ago, however, ten years ago, the p.e. was 30 or something significantly higher, not 9 or 7 or -- >> whatever it is. >> whatever it is. so, but -- we also see that apple as a company, as a business, is very different than apple as a stock. >> right. >> which is -- it's a free for all now.

that's not my area of expertise. >> right. let's bring in a bear on apple. paul shaft s is with us. good to speak with you. you said abopple could decline 50%, $150 lower from where we closed in today's session. that's a nice headline, but walk us through how you get there. >> sure. this is not new, as i woke up today. this was on the way up. to me, every bull market in history, you can go back to the dot com basketball, ba dot com bubble, stocks become ingrained in our vesting fiber. they can do no wrong. everybody must own them. apple became the story stock of the post-financial crisis bull market. when apple peaks, it's not just apple. this is what happened with google in '07, went down 66% and yahoo! and ge and on and on. so, when the next bear market comes, which i think probably begins sometime later this year,

apple's going to get taken apart. it started a little earlier, because frankly, i think we're still in a bull market. >> how do we get a decline of 50% to 80%? how do you come up with that percentage decline? >> it's based on historic research of every storied stock in history. the bear markets are very unkind. they punished the people that came in late. if you look at a chart of apple. the last big move, the real acceleration started at about 400 and axel raexcel rated almo to 405. if vihistory is any guide, you wipe out a minimum of people that came in during the high mo phase, that gets me at least under 400. and if you used a 50% to 80%, you get somewhere between 300 and 400. >> right. >> i'm not saying apple is done. it's a wonderful company, it will be around forever, but i think apple's best growth days

are certainly behind it, just like ge's best days were in the '90s. >> you make a lot of interesting arguments, paul, you seem like you know what you're doing, but you're not putting your money where your mouth is. are you short apple at this point? because if it is a 50%-80% decline, i would think this is a slam dunk of a trade from your standpoint nd we have -- disclosure, we have no position in apple long or short. i take a sector view of investing and trading. but apple is certainly the bell weather stock for technology. and to me, technology, the best days this bull market for tech are over and apple is one of the clear reasons why. i though the story with dell today and that gives us a little leg. but i think tech is, best case perform with the market and i think second half this year, tech's a clear underperformer. >> paul, real quick. the one hole i'd put in your argument is valuation. when you tack about the tech names over the past, extreme

valuation levels they reached that seemed exuberant. you can't say that about apple even at 700 but particularly now at 500. what is about apple right now that you think completely uses all the mojo. we heard from leon cooperman, smart investors who have been out of the money for awhile now, wanting to get positions on, if this were to break below 500. why would we break all the way down to that 350 level? >> i don't think it happens right now. i think -- at some point, you're going to get $100 rally in apple. to me, that's a rally to sell and to sell tech more than buy. i don't think it goes down to 460 in the short-term. i think maybe the break is to maybe 495, 490, 485. but the valuation question, let's not forget, in '06 and '07, the financial stocks and the home builders, they had p.e.s in the single digits and they still went down 50% to 90%. cheap can get cheaper. this could be a value trap.

listen. fundamental -- a lot of the high levels are way above my pay grade. i look at history. and history says this is likely where the stock is heading. >> all right, paul, we're going to leave it there. good to speak with you. >> thank you. >> all right, you buy -- 350, down to 350? >> listen, you can make the technical case that it would go down to 350. it's come from 700 down to 500. if there's any symmetry in the markets -- but i don't know if it gets there. i think it's going to be tough to get down to those levels. >> people get out of apple and go into a nokia and rim. rim, big move today. >> right. those two names have been particularly strong over the last couple of sessions. whether or not that means that's rotation out of apple, i'm not so sure that's the case. maybe that could be the case and maybe you could put an argument up a few months from now, but i think the one thing you talked about is cheap get cheaper and he talks about the banks and the valuation. i have to look back at apple, say, i don't hit the -- they

don't have the same kind of cash position -- >> we do see that android is stealing market share. what i'm concerned with is if he thinks it's a blanket tech selloff, that's more concerning because if you are going into, as we said before, a google or an amazon, something like that, retail electronics, is it all going to get hammered or just an apple story? >> if you really think that money is going out of this, into rim or nokia, look at the market caps of those. you don't need apple sellers -- >> to really move. >> six would do it, i think. >> all right. in terms of whether or not we're seeing a selloff in technology, later this hour, we're going to get what the technicals are saying about apple's drop. check the charts of chris verrone. let's go back to hq for a market flash and mary thompson. >> we're watching dell in the afterhours session. the stock of the day today, finishing up almost 13%. it was up almost 17% during the

day, the largest move we've seen since october 2000. the reason for the rally, reports that the company is in talks to go private. if it did, it would be one of the largest ever at the end of the day, it's market cap, 21 billion shares. there are concerns, though, while its stock rose, bonds fell and sean egan of egan/jones said the buyout would be problematic citing lower revenue. back to you, melissa. >> thank you, mary. the interesting twist to the dell story is the head at m and a of dell left for blackstone, earlier this month, so, that amends fuel to this fire. >> it amends a little fuel. and if you just look at other markets, mary mentioned the debt market. you look at the credit default swaps, they jumped up on friday which would suggest the company might be taking on more debt. that generally happens before an lbo. it is kind of interesting you see that happening. and lbo makes perfect sense here. you've got cheap cash, if you think there's going to be any type of inflation. i think dell's debt cost is

1.3%. 3% inflation, you've got free money. it makes perfect sense. >> and pete, you got into this trade via the options after the stock popped, after the volatility. >> the volatility is absolutely ridiculous. 58,000 of the 12 1/2 calls traded today. that's double what had been the previous open interest. is there speculation out there, sure. but it's very cheap. >> all right, coming up next, the biggest movers you may have missed today. plus, facebook's big mystery event. what the social media giant could be unveiling tomorrow and why one investor believes the stock is on the verge of a breakout. and dennis gartman is here with new trades for a bull market. back after this. ♪

[ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it.

welcome back to "fast money." ben bernanke just wrapping up a twitter q and a session. let's go steve gleason, who was monitoring this. >> he took questions from the audience, was interviewed by dean susan collins. and he said the fiscal cliff deal represented progress but urged congress to raise the debt ceiling, saying it gives the government the ability to pay its existing bills. he said, we think we're getting some effect in lowering interest rates but saying it was still early yet. saying we have found it can be an effective tool but we'll continue to assess how effective and saying that could change over time. this comes in context of a debate on the federal reserve over the effectiveness of the additional quantitative easing and some concern about the negative impact. the felt, d, he said, has the

ability to undo the policies before inflation becomes a problem. and then he was asked about the federal reserve enabling congress to spend a lot of money because it buys the government's debt, but he said it's not up to the fed to play games and tell congress what it should and should not be doing on its spending. and he added that the federal reserve has to follow its dual mandate. he was asked about question about his personal and he said, i try to get a lot of sleep and then, melissa, talking about social media, in response to a very long question he was asked that apparently came from twitter, bernanke said, was that really 140 characters? >> wow. >> i think you could -- i thought i'd live a long time before i heard a felt chairman say that. >> yes. steve, i'm just curious, did he address the notion of treasury minting the platinum coin? >> i meant to tell you that. here's another direct quote. i'm not going to give that any

oxygen, he said. >> okay. put that to bed. >> he sounds a little bit like the president in a sense of, i'm not going to engage in any of these quirky ideas that are out there. let's deal with the issue of raising the debt ceiling, which is the pomeresponsibility of congress. >> steve, thank you. facebook is holding an event tomorrow, inviting people to see what they're building. jillian boarson has a preview. >> well, melissa, facebook has been keeping this event very much under wraps, but i don't think the announcement is about a new phone, i think it likely has something to do with mobile, considering the priority that has been put on making money from growing mobile users. it could be about a social search engine, though rbc warns that search would take a long time to pay off for facebook. >> search could be disruptive to google if facebook were to make a major play there. i think it's very unlikely that facebook would have any material

success in search, you know, in a three-year period. >> he speculated that the announcement could involve a physical building, so, the company certainly has everyone guessing. now, facebook's mystery announcement comes on the heels of a slew of positive analyst reports. just today, they were upgraded from hold to buy and oppenheimer raised its earnings for facebook. so, momentum has been building ahead of the fourth quarter earnings report, which is coming up on january 30th, after the bell. now, melissa, i will be at facebook headquarters for the announcements tomorrow and we'll bring you all the headlines. back to you. >> a lot of people will be watching. julia, thank you. what are shareholders expecting? let's bring in larry fischel, a facebook shareholder. welcome to the show. >> thank you. >> what do you think it's going to be tomorrow? >> it's going to be about the mobile. video advertising on the mobile. the whole upside of facebook is mobile. i believe face tbook is going t be well over $50 a share this

year. it was all public relations issue. unbelievable, you talk about mark zuckerberg, if you got fitted over wearing a hoodie, you would have gotten better public relations. you're talking about $6 billion in revenue, last quarter, $150 million in advertising mobile. i'm looking that to be $300 million in mobile advertising, so, the whole world here is coming into the tech ecosystem into facebook. they've really become the de facto company. so, if you don't believe in facebook, then you don't believe in the tech ecosystem. if you look at the iphone, they have the apps, they have 70% penetration into the ios and they have 35% penetration into -- >> right, the problem, larry, is that no one understands. if people are expected to believe in the story, we have to sort of hear the story. and they have done a poor job in portraying their story. >> terrible job. >> we had the ipo that was

botched. and then, you see zuckerberg come out and actually speak about the stock, it pops. then you saw that short covering phase, but now it almost feels like they're setting up to disappointment. or you feel like the stock could be sold if there's some type of app or something that no one really gives anything about. >> here's the thing. it was a public relations nightmare. we go back to the hoodie. the whole thing with facebook is, if you believe in the ecosystem, you believe in facebook, because there's a billion users. if you monetize a billion users and growing and mobile -- >> how many actuive users, how many people put facebook up and never do anything with it? >> well, you are always going to have some breakage. if you look at how fast they have grown and the penetration now -- the, you know, when it came out at the ipo, that was before mobile. now, we're getting into the mobile -- >> i got to take issue with you on the hoodie. i think they got multiples of

revenue that they wouldn't have gotten with a suit, because, wow, he's wearing a hoodie, this is the new paradigm. to me, if you are saying, if you're not in facebook, you don't get the social thing, that may be. but is there not a point where valuation matters? to be facebook already is valuing a lot of success on the mobile front. >> it's 50 times earnings. you look at amazon that is 70 plus right now is there's only 6% of the world is e-commerce. >> you can look at google at 14 times earnings. >> you can. but facebook, for the investor when we are out there chasing yield, looks a lot more attractive, getting in at $32, i think today it went down to $30, i think you saw a little bit of profit-taking today and i think it's going to bounce back up. so, it's a better place with the future growth. >> i want to get to your prediction. it may seem to be a little off the wall, that facebook will buy netflix. why? >> i believe they will. you went into the ipo because

you had to get cash for the ipo. you have to acquire to move into the space. so, you need to be three main things in tech. you have to be in content. you need to be in apps and mobile. so, if they take the content of a netflix and put that into their world's largest, what i call operating system, you have a whole other revenue stream. you have the e-commerce, the advertising and the content. what i've seen with netflix, the tea leaves are very interesting that they are out for a play. >> this yields for you, in addition to your projections for advertising revenue, that yields to you $50 price target? >> at least, yes. >> with the addition of netflix. >> yes. >> larry, thank you. let's trade this. facebook, you like it? >> you know, not right here at a trade. i think -- i'm with grasso. i think it has a huge potential for disappointment this week. unless they come out with something fantastic, but i think if they come out with a mobile search or any type of thing like that, you have to sell the news. in the long run, if you think

zuckerberg is the next steve jobs, then you buy it, put it in a drawer. >> i would rather own google and i do. that's where my money is. that's a great search product with potential for mobile to be gigantic. >> google is great. but the upside for facebook here is, there are plenty of catalysts out there. say it's 300 million active of the billion that are out there. that's still a pretty unbelievable audience in front of you and if you can make any kind of headway with the search area, i'm with larry here. i actually think there's a lot more upside. i continue to own this stock. all right, coming up next. just because investors are souring on apple doesn't mean the rest of the tech sector is forbidden fruit. and why this could be the best time to buy apple's main component makers. we head to the options market for the answers. first, the stock market getting a new shot of capital. we tackle if t to see if it is bullish sign. dennis gartman, coming up next.

♪ ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit. introducing the all-new 2013 lexus ls f sport. see lioutdoors, or in.ight. transitions® lenses automatically filter just the right amount of light. so you see everything the way it's meant to be seen. maybe even a little better. visit your eyecare professional today to ask about our newest lenses, transitions vantage and transitions xtractive lenses. experience life well lit. ask which transitions adaptive lens is best for you.

what are you doing?

nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office. welcome back to "fast money." i'm maury thompson. shares of herbalife up 10% today. some analysts saying this is a short covering rally. crossed above its 50-day moving ability. one analyst says that herbalife

could be the mother of all short squeezes. keep in mind that short interest in this stock increased by over 40% in the second half of december. back to you, melissa. >> thank you, mary. and this, by the way, is pre-bill ackman levels, talk about short squeeze, of bill ackman, a short in the name. what do you notice? >> one thing we were looking at, after the presentation, the idea they would do a self-tender. we started looking at conversions that allow you a back-end put. pete would know this much better, but they got very expensive. we were clearly not the only people looking. >> people start paying up that normally shouldn't be all that costly, but because of the fact of the short, everything else, and the want to get into that position that you're describing, absolutely people get very aggressive at times like these. >> okay. let's move on here. stocks near five-year highs. the tide is turning back in favor of stocks as investors put their money to work in the equity market. is there still room in this trade? let's go to dennis gartman, the editor of the gartman letter.

dennis, good to see you. >> always good to be seen. >> so, you believe, based on the early data coming out, you believe this is, in fact, the rotation that we've all been waiting for? >> i really do think it is, mel. i think that's exactly what's going on. people have finally beginning to understand that fading the federal reserve bank is going to be a very bad decision. probably, i suspect you're going to see stock prices continue to move higher. i suspect you're probably going to see bond prices continue to move on, yields continue to move up. and it could go on for quite some period of time. corporate balance sheets of the united states are in very good shape. even consumers are in much better condition. if we have any news that shows us we make some movement on the budget that is even, just modestly amenable, modestly applicable, i think you can take stock prices dramatically higher. i've been long s&p futures, short of treasury notes and equal dollar amounts. i am that way in my own account

and i'm going to stay there. >> dennis, it's b.k. how are you? >> good, how are you? >> good. we're seeing a selloff here in the bond market, but recently, it's firmed up a bit. you haven't seen an awful lot of flows come out of bond funds. so, does that concern you at all that you haven't seen that and what, if the bond market rallies? does that change your thesis? >> it has fallen rather dramatically. it's broken almost every imaginable trend line. the back end of the market, the bonds have been the weaker of the sector. that's as they should be. beeks, everything that i see going on tells me this is going to continue. i was there in august of '81, at the bottom of the bond market, at the top of yields and this has the same feeling to it in the opposite direction. it's been a 30-year, hard to believe, a 30-some year bull market in debt and for the first time in years and years and years, and my old friend gary schilling is probably going to

call me tonight and say, dennis, you're wrong, because he's been right for three decades, but it has the look that the 30-year bull market in debt has finally ended and i think -- those who have taken the other side of the federal reserve bank and the fed has made it clear, they would like you to come to the equities market. anybody that fades the -- >> dennis, it's grasso. the only problem i have, i'm usually on the same side of the trade with you, but we saw that fund flow data last week. >> yes. >> the last time we saw these type of fund flows, we saw the market fall off a cliff. it was back in march of 2000. and the market about four months later was down 50%. then we saw the other one in '09, september '09, and the market was down around the same amount, 50%. number of months later. then we have the debt ceiling debate coming up. we're going to get another notch downgrade. that's good enough for another 15% selloff, that's where i'm at

right now. i don't see a reason to jump into this market. are you figuring out that maybe the first quarter, maybe the hedge leg into this market or are you saying from this point forward? >> well, i've been at this a long time and i know i can be unbelievably wrong and i have been in the past on a number of things. the trick in the business is when you're wrong, admit it. when you are losing money, cut your position. right now you the market is telling me with the s&p at or near new highs with the bond market breaking up trend lines that that is the right place to be. yes, when we saw the numbers for mutual found inflows, we thought, oh, my lord, that's the end of the move. i'm not sure this time that's the correct paradigm. i think this time we might actually begin seeing or are seeing net inflows that actually have years in duration. >> so, button this up for us. if you say long stocks and rotation out of bonds, where do you see the yield?

i know you are going to say lower left to upper right, but -- how far above two are we going to be? >> i think -- i easily can see the long bond -- whether it's this year or not, we're going to see 4% yields at the ten-year sometime in the next two years and it will bother everybody because rates are going up, but i'm telling you, in my tenure in this market, the best bull markets we've had are when rates are rising, not when rates are falling. we're going to continue to see the fed easing monetary pollty or remaining easy but the back end of the yield curve will get stronger. rates will go up. the yield curve will get more possibly sloped and that will be indicative of strengthening economic environments. >> got it. dennis, great to see you. >> always nice to be on. >> dennis gartman. time now for pops and drops, the big movers you might have missed. drop for verizon. b.k.? >> trading down in sympathy with apple and the order cuts.

verizon sells a lot of the iphones. i would stay away. >> big pop for fifth and pacific. up 11%. karen? >> yes, they were at the icr conference, a big retail conference this week and they put out numbers which were not as disappointing that people thought. kate spade, absolutely on fire, even though juicy, not so juicy, but we like fifth and pacific. >> pop for research in motion. pete? >> this is the story with a no story. a stock that was $11.82 at 10:00 in the morning that finished at 1 $14.95. there's been volume in the stock and options. expectations this stock is going to go higher. splenty of speculation. forget about that. a lot of dollars right now. >> pop for ups. grasso? >> their deal with tnt express fell apart. they have to pay $266 million because it did, but it frees up $6.8 billion in cash. the speculation is that it winds up in share holders' pockets. >> and a pop for orlando the cat. who, we ask you, is better at picking stocks? the pros or house cat? british newspaper "the observer"

challenged fund managers to pick better portfolios than orlando the cat. well, the pros used research to make their picks. the feline selected his stocks by throwing a toy mouse at a grid of xeefs. at the end of the year, orlando outperformed the pros. >> if he gets killed in trading, he's got eight more lives. >> oh! >> very good. >> nice grasso. >> ey. up next, why apple's troubles may not spell new problems for the rest of the tech sector. and a street fight over whether your smaller paycheck will actually hurt the retailers. back right after this. this is $100,000. we asked total strangers to watch it for us. thank you so much. i appreciate it. i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money? if your bank takes more money than a stranger, you need an ally.

ally bank. your money needs an ally. office superstore ink retailer in america. now get $6 back in staples rewards for every ink cartridge you recycle when you spend $50 on hp ink. staples. that was easy. with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while

cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com.

welcome back to "fast money." apple taking a beating today, but is the tech sector poised for a breakout despite this drop? wlet let's check the charts with chris verrone. nice to see you. >> nice to see you. >> what do you see in the charts with apple? >> let's talk what happened. we held the 500 level today, which was important and probably bounce from there. i think that's a rally you fade. and i think it's a really you fade because the big problem for me is, what the relative strength line looks like right

now. apple has none. it has underperformed for the last 11 months. we looked at the last ten years of apple price history. this is the longest apple has lagged the market in over a decade. we don't think that's how stocks in bull market act. we'd be fading this rally if we get a bounce off 500 here. we think looking longer term, that 430 level is more appropriate to look for a bottom. what's interesting, we've seen some of that money which has come out of apple go into the more cyclical corners of the tech sector. in particular, semi is acting a bit better. we have a nice bottoming pattern that took shape over the last couple of weeks. we think that's an attractive area to look in. >> so, what does this all mean for the s&p 500, which sits close to five-year highs at this point? >> i think what's been encouraging, as we see the large cap leaders lag, like apple or

microsoft, we've seen a ground swell of stocks step up to fill that void. so, participation has improved. leadership has improved and leadership has gotten more cyclical. so, when we look at the s&p chart right now, we think it's okay. there's good support in the 1440 to 1460 neighborhood. we think the odds of a breakout, getting up through to new four, five-year highs maybe a run at 1550 is in the cards. and what is driving the thesis here is that leadership has gotten more cyclical. we've seen industrials improve, financials improve. we've seen semis improve. we think that sets a positive tone for the market. >> hey, chris, brian. so, i'm curious on ibm. we had jpmorgan downgrade them today. that stock looks to me like it's topping out. could be a very long-term top. do you have any view on that and if so, how does that fit into the rest of your view on the markets? >> i agree. this is a stock we've been telling our clients to avoid, to reduce, to trim it. it's been a winner for four, five years, it's now stock in

that 190 to 200 range. while it's gotten stuck, it's a story of a name with no relative strength. it's not paying you to own it anymore. it did for three, four years. that relative strength has eroded. we think that's a pretty dangerous combination. particularly given the fact that apple broke down, microsoft broke down, intel broke down. what makes ibm so special? we think that's a vulnerable one. >> chris, thank you for your time. chris verrone. do you buy the motion you want to be in the more cyclically sensitive areas? >> you can look at the smh and you've seen where the market, though apple's broken down, you can see the smh traded pretty well, the financial have traded pretty well. you can look at the pharmaceuticals, the industrials trading well but there are specific names out there where you can see the rotation out. sure, i like some of the chips. the chips that are trektly related to apple, they are getting hit pretty hard.

>> yeah, we saw declines in qualcomm, broadcom. so, let's bring in scott nations and see what he saw in the options pits today when it comes to the apple suppliers. scott? >> that's right. all of the apple suppliers had a tough day. but in qualcomm, option traders are playing it for a bounce. and given the qualcomm options got more expensive today, this is a pretty aggressive bullish stance. what we saw in qualcomm was, we saw buyers of 3,000 of the jan 65 calls that paid an average of 23 cents for those. that means their break even is 6 $65.23. interesting level, because qualcomm's flirted with that break even price this year and in the last quarter. but we have to go all the way back to april 2012 before we see a close above that level, so, we see why people want to define the risk and buy calls rather than flirt with that break even level. >> all right, thank you for that, scott. coming up next, the euro closing in on one-year highs

against the u.s. dollar. what could happen next? but first, uncle sam taking a chunk out of americans' paychecks. two traders clash over how this could affect retailers. much more "fast" straight ahead. [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ how did i know? well, i didn't really. see, i figured low testosterone would decrease my sex drive... but when i started losing energy and became moody... that's when i had an honest conversation with my doctor. we discussed all the symptoms... then he gave me some blood tests.

showed it was low t. that's it. it was a number -- not just me. [ male announcer ] today, men with low t have androgel 1.62% (testosterone gel). the #1 prescribed topical testosterone replacement therapy, increases testosterone when used daily. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breastfeeding, should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. so...what do men do when a number's too low?

turn it up! [ male announcer ] in a clinical study, over 80% of treated men had their t levels restored to normal. talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up. androgel 1.62%. get the blood tests. change your number. turn it up. i've always had to keep my eye on her... but, i didn't always watch out for myself. with so much noise about health care... i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile. not random statistics. they even reward me for addressing my health risks. so i'm doing fine... but she's still going to give me a heart attack. we're more than 78,000 people looking out for more than 70 million americans. that's health in numbers. unitedhealthcare.

first round of paychecks under the fiscal cliff deal were issued last week. the payroll tax hold day was not extended, so, that pushed the tax and social security up to 6.2% from 4.2%. despite the consumer discretionary shot up. no everyone is convinced the run can last as consumers feel the pinch. it's time for a street fight. karen is bullish on consumer discretionary, b.k. is bearish. so, beeks, lay out the bear case. >> okay, so, i start, karen is undefeated. i'm going to mind by ps and qs here. i think consumer discretionary is overdone here, primarily because when you look at consumer credit and disposable income, they increase one to one. we had an increase in consumer credit, away from the trend. you have an increase in

disposable nexincome. it may not be a lot, but that could have a nonlinear effect on the area. when i look back at the valuation of it, xly or the underlying index is trading at the high end of its valuation on a p.e. and price to book ration owe is the word i was looking for. it a tough word. >> yeah. >> r-a-t-i-o. >> yes. >> i but curious about this, because it doesn't sound like a lot, but the tax policy center says that's $18 to $20 less and that could be $900 to $1,000 a year, and that could add up. >> it could. i don't want to debate that, but i think that as important or perhaps even more important is the idea, i'm optimistic on the american economy here, so, i think we will see greater employment overall and that those marginal dollars that will be spent on discretionary, clothing, that sort of thing will be a positive for the retail space. but i think in this

discretionary space, one really needs to be discretionary. and that there are absolutely going to be winners and losers here and last year, everything moved up or down together. we are starting to see differentiation. you have a loser like jcpenney. somebody is taking that share. could be target, macy's, we're long both of those. you have another loser, kohl's, losing share. and i think a macy's, though it hasn't traded well on christmas, give brian that, it has inventory under control. i think their earnings will be good and i think the valuation here, when you can buy macy's at 11 times earnings, you do it. >> do an apples to apples, though. for the xly, the etf, so, a basket of these retailers, you are not being discretionary -- >> i can't be. >> would you still be bullish? >> yes, i would, because -- >> okay. >> but i would rather pick. >> and just to be fair, would you still be long some retailer if you were able to choose? or you say no to the whole

sector? >> well, my analysis is no to the whole sector. i'm sure if i dug through it, i might find something i like. but i will say no. >> what do you say? >> you have amazon in the xlys, so --mazon. >> it's more than retail. then you have home depot. that's a housing recovery stock. and the tech any cams on that are on fire. so, yes, i would still be a buyer of those two names. >> pete? >> i think you're talking about the xly. i love the fact you've got the china play with starbucks in there. home depot and lowe's to the housing. and obviously the online world of shopping. i think that's the direction, whether it's ebay, amazon. but it seems to always go higher. i like ebay if i was going to pick. >> streak continues. karen is undefeated. >> b.k. did use standard deviation. >> and ratio. >> i mean, ratio, he just pulled that out of nowhere. >> nonlinear. >> that's what six years of

college will do for you. >> everybody gets a medal. >> everybody gets a trophy. coming up next, how to create the best bang for your buck against the u.s. dollar as the debt ceiling debate intensifies. and we head to twitter to trade your tweets. much more "fast" coming up. see life in the best light. outdoors, or in. transitions® lenses automatically filter just the right amount of light. so you see everything the way it's meant to be seen. maybe even a little better. visit your eyecare professional today to ask about our newest lenses, transitions vantage and transitions xtractive lenses. experience life well lit. ask which transitions adaptive lens is best for you. ♪ ♪ ♪

[ male announcer ] some day, your life will flash before your eyes. ♪ make it worth watching. ♪ the new 2013 lexus ls. an entirely new pursuit.

the euro trading at 11-month highs. is your best buy to back the greenback. as we head into fiscal cliff 2.0, is the u.s. dollar no longer going to be a safe haven? that's what we saw with the original fiscal cliff debate. >> i think with the -- where we are starting 2013, i think a lot of the uncertainty has been taken off the table. so, therefore, the need for the dollar to be a safe haven asset has been reduced. i still think there's a lot of trouble or a lot of potential issues on the horizon, but we no longer have tax uncertain tips in the near term in the u.s. some of the bottom in europe has been taken away with the ecb and their current actions. we've seen yields falling throughout europe. so, i think it's more about the overall global sentiment being

better than the dollar just being a risk on or risk off currency. >> we did have a lot of finance ministers of late talking about behind us. schobel saying something to that effect. so, you actually want to go in and buy euro-u.s. dollar on a dip? >> yes, i do. if we see a dip towards 1.32, we can continue to seat the euro trading higher. i think the fed has been very explicit that until we meet certain targets in regards to growth and employment, they're going to keep interest rates at a low level for longer. in the interim, yields in the euro zone are attractive. >> all right, so, 1.32 is where you go in. what's your target? >> my target is 1.36 with a top at 19.30. >> all right, willie, great to see you. >> thank you. >> willie williams. moving on, apple, certainly a hot topic on twitter today. no surprise there.

seema mody has been tracking what's been trending, so, what did you find? >> the rotation of capital out of apple, that's a big discussion, a lot of traders on twitter talking about how they were getting out of apple and buying into other tech names. so, what tech stocks were the apple sellers buying today? let's get straight to the tweets and messages. dr. duru rips that hot money is going from apple into amazon, now, grasso, those two companies are fierce competitocompetitors. is amazon a better stock to buy? >> right now it is. right now it has momentum. and it has amazon web services. the fulfillment centers which allow businesses to store their goods at those fulfillment centers and only pay when amazon does all the work and delivers them to the end client. they're kicking people out of cloud services. amazon is the place to be. >> right now, amazon is a better stock to own. let's get to our next tweet. crossbones says, i bought yahoo! today. they are going to upgrade the

e-mail service, overall, they seem to have a game plan. can the stock move higher? >> sure. it looks like it. i think the market is expecting that. if you look at the option market, people continue to go to the upside. and the value, the breakup value that everybody talks about, they don't need to break up. >> all right, seema mody, thank you. we have your first move tomorrow when we come right back. stay tuned. what are you doing?

nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.